The Amazon Automation Scam: Unveiling the Truth Behind the Hype

In recent years, Amazon Automation has gained significant attention as a supposed path to financial success. One Apollo received numerous calls from curious individuals asking if we offer this service and our thoughts about why we don't. Undoubtedly, the allure of automated businesses and substantial passive returns is hard to resist. However, it is essential to understand the reality behind this seemingly lucrative opportunity. In this blog post, we'll explore the truth behind Amazon Automation, reveal its deceptive nature, and explain why building a brand is a more viable long-term approach in the e-commerce industry.

Understanding Amazon Automation

Amazon Automation is a business model involving a client investing with an Amazon Automation service provider to leverage Amazon's platform to sell products without the client's active involvement in inventory management, customer service, or fulfillment. The service provider will build the client's store from scratch, populate the store with product listings, and manage all operations for the store. The typical investment costs for an Amazon Automation business package range from a few thousand to tens of thousands of dollars, depending on the program or package purchased. The promised returns vary greatly, with some proponents claiming substantial 20-30% returns in a short period.

Screenshot Taken from AMZPUSH

The Deceptive Nature of Amazon Automation

- Sourced Products and Commoditization: Many proponents of Amazon Automation suggest sourcing or dropping shipping products readily available from manufacturers or suppliers. However, these products are often generic and are openly available to anyone, leading to fierce competition and diminishing profit margins. In the long run, such commoditized products are unlikely to sustain profitability.

- Drawbacks of Drop Shipping: Drop shipping orders from China take 10-15 days at best, which is not preferable to most buyers. As a result, Amazon often ranks FBA fulfilled products over similar products fulfilled by seller (drop shipping included). In addition, it is not uncommon for suppliers to dropship the incorrect product, causing a high return rate and eroding the thin margins the business model already runs on. Furthermore, relying on a supplier with minimal incentives to provide the correct tracking number or ship on time will cause the seller to fail at meeting Amazon's dropshipping TOS, leading to account suspension and stonewalling returns.

- Predominance of Chinese Sellers: Contrary to the claims made by Amazon Automation providers, most successful non-branding sellers on Amazon are based in China. It is rare to come across an "automation" store operated by a US-based seller offering a range of generic products. This reality challenges the notion that Amazon Automation can lead to significant profits. Commodities are competitive by price, and competitors across the Pacific will invariably be cheaper since they have lower costs.
Experiences from Past Amazon Automation Investors

There are troves of experiences shared by investors of Amazon Automation businesses online. First, I'll start with a press release from the FTC halting DK Automation from pitching Phony Amazon Moneymaking Schemes after receiving notices of penalty offenses. In short, the FTC notes that the "defendants [DK Automation] sold their Amazon programs under a number of different names, including AMZDFY, Amazon Done For You, and Amazon Done With You. According to the complaint, they promised consumers a "100% turnkey" business selling products on Amazon and charged consumers as much as $100,000 for the program. Their marketing and sales pitches were filled with fake consumer reviews touting huge profits." DK Automation also "manipulated online reviews by falsifying positive reviews and flagging negative reviews that resulted in their removal," and "threatened to sue a dissatisfied consumer who spoke about his negative experience with the company..."

Here are a few snippets of online reviews from past investors regarding their Amazon Automation provider.

"The absolute lowest of the low. Preying on people looking to make passive $$ with lies, fabrications and deceit. They will tell you absolutely anything until you wire them the huge upfront investment of $30-$50k. Then they will do nothing they told you they would and not respond to any questions."

"They sold me on a $35,000 Amazon Automation store claiming and showing fake store returns of $3-5k a month on the low end. After being with this "company" for over a year I have made a grand total of $0 on my investment and they want me to pay another $20k now to buy inventory for a new model"

"We paid over $70k to them for an Amazon and Walmart store. Both of those stores were terminated and the 3rd store they provided in lieu of the Walmart termination also got terminated. 3 store terminations in about a years time."
The Power of Building a Brand in eCommerce

Rather than falling prey to get-rich-quick schemes, it is essential to recognize the value of building a brand when entering the e-commerce industry. By developing a unique identity, establishing customer loyalty, and offering products or services of genuine value, businesses can cultivate a sustainable and long-term presence in the online marketplace.

As we conclude our exploration of Amazon Automation, it is crucial to approach this business model with caution and skepticism. While the concept of passive profits and freedom from operational burdens sounds appealing, it is essential to remember the age-old adage: if something seems too good to be true, it probably is. If a service provider promises astronomical returns within an unbelievably short period, it is a red flag indicating a potential scam. Instead, consider focusing on building a reputable brand in the e-commerce landscape. By nurturing customer relationships, offering exceptional products, and investing in long-term growth strategies, you can pave the way for sustained success in the dynamic world of online business.